The other day, my five-year old granddaughter asked me, “Grandpa, if you could be an animal what would you be?” It was fun talking with her about all the possibilities.
As a Registered Investment Advisor and financial planner working with a wide variety of clients, the question made me think that there are different types of investors who seem to have certain animal tendencies.
First is the “River Otter Investor.” This was one of my favorite animals to watch at the zoo. They seemingly would be constantly playing, jumping from one activity to the next. This type of investor gets easily excited about the new, “best investment” to come down the road. There does not appear to be much serious thought in what they do. They seem to go along with whatever others are doing at the time. Taking big risks can sometimes mean big winnings, but more often than not, big losses are the result. They have no game plan.
The “Rabbit Investor” is timid, hops along for a while and then stops to see what’s happening. Rabbits are usually startled and when something scares them, they run for cover even though whatever startled them was harmless. They tend to listen to what the “investment entertainers” or the media has to say even though it’s just a blip in the longer time frame. They often rush to sell when they should be buying, or after they sold they wait too long to buy back in. As at a result of trying to be safe they seldom get ahead.
The “Ostrich Investor,” while having the ability to move swiftly and precisely, finds more comfort by sticking their head in the sand and avoiding the realities in the market around them. They often get eaten since they did not see what was coming.
The “Squirrel Investor” on the other hand is perhaps the type of “animal investor” everyone should strive to be. While the squirrel is generally happy, animated and content, this type of investor balances current needs with future needs. This investor has a methodology and process to regularly squirrel away some nuts or savings for future needs. They don’t stick all their nuts in one place but diversify amongst a number of places. Knowing that they have something for the future they have greater peace of mind; they know that they can enjoy today as well as tomorrow.
What type of animal investor are you? Perhaps this can be a wakeup call so that you too can chose to be a different type of animal investor to better balance current needs with future needs.